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Residential Status Income Tax

Residential Status for Income Tax

Residential Status for Income Tax

The income tax liability of a taxpayer is based on his/her residential status in the previous year. Also, while filing income tax return, the taxpayer must declare his/her residential status in the tax return. Under Income Tax Act, taxpayers are divided into the three categories of residential status, namely:

  1. Resident but not ordinarily resident.
  2. Resident and ordinarily resident.
  3. Non-resident.

Residential Status for Individual Taxpayers

Resident but Not Ordinarily Resident

An individual is a resident but not ordinarily resident in India in any previous year if he fulfils any one of the following two conditions:

  1. He/she is in India in that year for 182 days or more, or
  2. That he/she has been in India for at least 365 days in the four years immediately preceding that year, and is in India for 182 days or more in that year, subject to some conditions.

Resident and Ordinarily Resident or “Ordinary Resident”

A person is said to be “not ordinarily resident” in India in any previous year if such person is-

  1. An individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
  2. Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. Thus, an “ordinary resident” would be a resident who is outside the purview of the above definition.

Non-Resident

An individual is non-resident in India in any year if he does not fulfil any of the above-mentioned conditions in point 1.

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